India - A development vision for the northeast

The recent release of the Vision 2020 document, “Peace, Progress and Prosperity in the Northeastern Region”, by the Prime Minister, like many of the important Northeast events, has received very little media attention. The document was prepared by the National Institute of Public Finance and Policy at the request of the North Eastern Council (NEC) and it deals with the goals, strategy and action plan to achieve peace and prosperity for the people in the region. Given that the living conditions of 39 million people depend on achieving peace and progress in the region and the development of the region is crucial to the unity and integrity of Indian federalism, the report needs to be discussed.

Troubled by history and geo-politics, India’s Northeast has remained backward. At the time of independence, the region was in the forefront of development. Well-connected to the mainland through East Bengal (now Bangladesh) and the rest of the world through the Chittagong port, the region attracted significant trade and investment. In fact, the second earliest railway line in British India in the late 19th century was between Dibrugarh and Chittagong. However, with the partition of the country, the Northeast became completely landlocked and the region got isolated. The connectivity to the mainland was restricted through a narrow 27-km Siliguri corridor and 98 per cent of the boundary constituted international border. Lack of connectivity and abysmal infrastructure resulted in poor market development and high transportation costs added to non-competitiveness. Seclusion, stagnancy, poor connectivity and non-responsive governance provided a fertile ground for insurgency. These factors, along with a low capacity of institutions, created a vicious cycle of low investment and growth.

Improving the standard of living in the region would require sustained increases in per capita incomes and a fair distribution of wealth among people of different communities and groups within the region. Average per capita income in the region is 62 per cent of the national average. To reach the average standard of living of the people in the country in 2020, and assuming that the country will grow at a rate of 8 per cent per year, income in the region will have to grow at an average rate of 12 per cent and per capita income will have to grow at 10.5 per cent. This is a formidable challenge, requiring initiatives on several fronts to maximise the gains of self-governance, developing the capacity of institutions and people for participatory planning, significantly upgrading infrastructure and connectivity, opening up the trade routes to neighbouring countries and creating an enabling environment for private investment.

The Vision document puts forward a strategy for inclusive development in the region. It gives six interdependent components of the strategy: (i) empowerment of the people through maximisation of self-governance and participatory development through grassroots planning; (ii) rural development by increasing agricultural productivity, creation of non-farm employment opportunities and augmenting the capacity of the people to participate productively in economic activities; (iii) development of sectors with comparative advantage and harnessing the resources of the region for the benefit of the people; (iv) building capacity in people and institutions to ensure their meaningful participation in economic activities; (v) augmenting infrastructure, particularly connectivity and transport infrastructure, to facilitate two-way movement of people and goods within the region and outside, open up trade within the region and with the neighbouring countries; and (vi) undertaking public investments in infrastructure, implementing public-private partnerships and creating an enabling environment for the flow of private investments to harness the resources of the region.

A precondition for peace and prosperity is people’s participation in decision making. Maximising self-governance and participatory planning is critical to inclusive development. Empowerment of people for participatory governance requires devolution of powers and building the planning system right from the village level. This calls for strengthening decentralised institutions — both Panchayati Raj in areas covered under Parts IX and IX-A of the Constitution and traditional village and district development committees in Schedule VI areas. The planning must be from the grassroots level and decentralised institutions should be designed to work in harmony with the traditional community institutions. Maximising self-governance and participatory planning will help to develop peace and harmony in societies ravaged by insurgency. Indeed, the reports on insurgency in the region are often exaggerated as this is confined to only certain pockets. Nevertheless, the perception has to change for the private investment to flow in.

The region is rich in natural resources such as land, water, minerals, and forests. The large river systems have been a source of misery due to floods and land erosion and these have to be converted into a source of wealth and prosperity. It is important to use the vast river systems for agricultural development and hydroelectric potential, and mineral wealth to generate additional employment and incomes.

Equally important is opening up the natural routes of transportation, trade and commerce. It is important to realise that the development of the Northeast is inextricably intertwined with the fortunes of the neighbouring countries. The “look east” policy, which has been in existence for over two decades, has hardly benefited the region; in fact the policy should start from the Northeastern region. This calls for opening up for trade from the Northeast to East and Southeast Asia and beyond.

A precondition for the development of trade and industry in the region is a quantum jump in the development of agriculture, agro-processing and manufacturing activities. Much of the investments will have to be made by the private sector and that is possible only when the enabling environment is ensured through infrastructure investment, which is most important. Competitive infrastructure will have to be created mainly by the Central and state governments. Large intra-regional investment in connectivity through roads, railways and waterways and in trade routes with neighbouring countries is an essential prerequisite for market-based development of the region.

An enabling environment for economic activity also requires responsive governance, capacity development of people and institutions and, above all, change in the mindset from one of security to development orientation in administration. Realising the vision of peace and prosperity to the people will require meeting this formidable challenge.

The author is Director, National Institute of Public Finance and Policy